Wall Street sinks along with consumer confidence

Posted: 01 July 2009 0558 hrs

Traders work on the floor of the New York Stock Exchange.

NEW YORK: Wall Street shares ended the second quarter in a slump on Tuesday after a surprise fall in consumer confidence dented hopes that spending will lead the country out of recession.

The Dow Jones Industrial Average shed 82.38 points (0.97 percent) to close at 8,447.00.

The tech-heavy Nasdaq dropped 9.02 points (0.49 percent) to 1,835.04 and the broad-market Standard & Poor's 500 retreated 7.91 points (0.85 percent) to finish at 919.32.

"The main culprit is an unexpected drop in consumer confidence, ending a two-month winning streak in that index," Charles Schwab & Co. analysts said in a client note.

The Conference Board, a business research group, said its consumer confidence index retreated to 49.3 points in June from a revised 54.8 in May.

Most analysts expected a much stronger reading of 55.3 points in the 100-point index.

Stocks turned sharply lower as investors digested the surprising decline in confidence which suggested recession-weary consumers were not ready to open their wallets to boost the spending that drives two-thirds of US economic activity.

"This latest setback in consumer sentiment does not auger well for any near-term revival in consumer spending," said Brian Bethune of IHS Global Insight.

Bethune warned that the government's massive economic stimulus efforts may "run the risk of engineering the biggest fiscal stimulus 'dud in post-World War II history."

"Despite the huge cash incentives being dangled in front of consumers to purchase homes - and prospectively to trade in gas-guzzling auto clunkers - households are not going for the bait," he said.

Still, the major indices ended the second quarter with robust gains. The blue-chip Dow jumped 11 percent in the past three months, the Nasdaq surged 20 percent and the S&P 500 advanced 15 percent.

Investors digested a raft of data in the holiday-shortened week, with the market closed on Friday for the July 4 Independence Day celebration.

The S&P/Case-Shiller index showed the decline in housing prices in the 20 top US cities slowed in April, to a drop of 18.1 percent, from a year ago.

Retail sales at chain stores rose in the past by the strongest gain since late January, the International Council of Shopping Centers reported.

Investors were focused on Thursday's unemployment report, which is widely expected to show the jobless rate climbed to 9.6 percent in June, up from 9.4 percent in May.

"The heavy burden of all of the people who have no jobs will bring down consumer spending and retail revenue, adding to this government's obligations as it struggles more and more with its growing debt load which will be compounded by falling tax revenue," said Douglas McIntyre of 24/7WallSt.com.

Among stocks in focus, United Technologies dropped 0.97 percent to 51.96 dollars and Caterpillar skidded 4.89 percent to 33.04 dollars.

ExxonMobil shed 0.95 percent to 69.91 dollars and Chevron slid 0.94 percent to 66.25 dollars as crude oil prices headed lower.

Walt Disney dipped 1.39 percent to 23.33 dollars after the entertainment giant and the Hong Kong government on Tuesday reached an agreement to expand the city's beleaguered Disneyland amusement park.

The bond market weakened. The yield on the 10-year US Treasury bond rose to 3.523 percent from 3.492 percent on Monday and that on the 30-year bond advanced to 4.311 percent from 4.307 percent. Bond yields and prices move in opposite directions. - AFP/de

From ChannelNewsAsia.com; see the source article here.

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Rising oil, commodity prices pull US stocks higher

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06/30/2009 | 07:33 AM

NEW YORK – A jump in oil prices sent investors rushing to put money into the stock market in the final days of the second quarter.

Energy, industrial and materials stocks pulled the market higher in light trading Monday as investors raced to keep up with the gains in oil.

Crude rose $2.33 to settle at $71.49 a barrel on the New York Mercantile Exchange after China said it would boost oil reserves and Nigerian militants partly shut down an offshore oil platform.

With the quarter's end coming up on Tuesday, some money managers were making last-minute adjustments to their portfolios just ahead of issuing quarterly reports to their clients. A benchmark against which many funds are compared, the Standard & Poor's 500 index, is up 16.2 percent since the start of the April-June quarter.

Analysts cautioned against seeing the upswing as a sign of conviction among investors that it was time to move into the market ahead of an economic recovery. Stocks seesawed in the early going but jumped after oil gained.

After running the S&P 500 index up 37 percent since March on a litany of "less bad" economic data, investors have become more cautious about the pace of the economy's recovery this month and are looking for more concrete signs of growth.

The Dow Jones industrial average rose 90.99, or 1.1 percent, to 8,529.38. The S&P 500 index rose 8.33, or 0.9 percent, to 927.23, while the Nasdaq composite index rose 5.84, or 0.3 percent, to 1,844.06. Stocks ended last week mixed.

There was little economic news Monday but the week, which is abbreviated by the Independence Day holiday on Friday, brings key data that could give investors a better sense of where the economy is headed.

Of particular importance is the monthly employment report due out Thursday. Though considered a lagging indicator of the country's economic health, the unemployment rate is still one of the most closely watched gauges of the economy. The labor market is intricately tied to many facets of the economy including consumer spending.

Investors also will get reports on consumer confidence and manufacturing this week.

The Dow is up 30.3 percent from a 12-year low on March 9, though it has fallen 3.1 percent from a five-month high on June 12. The blue chips are now down only 2.8 percent in 2009.

Harry Rady, chief executive of Rady Asset Management, is concerned that although the market's rally has lost steam in the past three weeks traders are still too optimistic about how quickly the economy can recover.

"I see a bit of complacency creeping into the market," he said. "The market has run up and that has the inverse effect of what it should."

Rady sees trouble in the continuing retreat of a gauge of fear in the stock market, and contends that investors are overlooking danger spots in the economy like heavy debt loads and weakness in the dollar.

The Chicago Board Options Exchange Volatility Index, or VIX, is a measure of stock market volatility that has been easing since early March. The VIX is down 37 percent in 2009 and stands below 26. The historical average is 18-20. It hit a record 89.5 in October at the height of the financial crisis.

Three stocks rose for every two that fell on the New York Stock Exchange, where consolidated volume came to a light 4 billion shares compared with 5.1 billion traded Friday. Volume was heavy Friday because of the annual reconstitution of the Russell 3000 index forced investors to make changes to their portfolios.

Bond prices rose, pushing yields lower. The yield on the benchmark 10-year Treasury note fell to 3.48 percent from 3.53 percent late Friday.

The dollar was mixed against other major currencies. Gold prices fell.

The gains in commodities lifted energy, industrial and materials stocks. Exxon Mobil Corp. rose $1.53, or 2.2 percent, to $70.58, defense contractor General Dynamics Corp. rose $1.54, or 2.8 percent, to $57 and Eastman Chemical Co. rose $1.38, or 3.7 percent, to $38.79.

Shares of Ford Motor Co. rose 17 cents, or 3 percent, to $5.78 after the automaker's top sales analyst said US auto sales might have stopped their month-to-month slide in June and could be down less than 30 percent for the first time since September. Automakers, which are expected to report June sales in the US on Wednesday, have been hit by a 37 percent drop in sales in the first five months of the year.

In other trading, the Russell 2000 index of smaller companies fell 2.61, or 0.5 percent, to 510.61.

Overseas, Britain's FTSE 100 rose 1.3 percent, Germany's DAX index advanced 2.3 percent, and France's CAC-40 rose 2 percent. Japan's Nikkei stock average fell 1 percent. - AP

From GMANews.tv; see the source article here.

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